Poverty, Unemployment, Human Development and Growth in Nigeria

ODUBOLA ISRAEL

O.

POVERTY, UNEMPLOYMENT, HUMAN CAPITAL DEVELOPMENT AND

GROWTH IN NIGERIA

ABSTRACT

The study explored the synergy among poverty, unemployment, human

development and growth in Nigeria between 1985-2013. The Ordinary

Least Square technique was employed for the regression analysis. Poverty

and unemployment are interlinked and in conjunction, contributed

adversely to the growth of the economy. It was also gathered that the

government has not prioritized on human capital development by failing to

give the education and health sectors adequate budgetary allocation and

attention. The results obtained unveiled that the principal causes of poverty

in Nigeria are unemployment and inflation. The study therefore

recommends that government should bring up an all-encompassing policy

that will basically focus on poverty alleviation, job creation and

macroeconomic stability.

1

Keywords: Poverty, Unemployment, Human Development,

Growth.

CHAPTER

ONE

1.1 INTRODUCTIO

N

Nigeria is the most populous nation in Africa and the

8th in the world with an estimated figure of about 170

million people based on the facts released by the

National Population Commission (NPC, 2012). In addition

to this, the nation boasts of being the largest economy

in Africa as the GDP figure for 2013 and 2014 stood at

N13526.25 and N14475.38 billion respectively (Economic

Watch). Despite these magnificent feats, the country

is still faced with several developmental, economic and

political problems such as youth unemployment, poverty,

corruption, income inequality, population explosion and

political instability.

2

Unemployment has been an hindering factor to the

attainment of sustainable development. In Nigeria,

unemployment is more prevalent among the youths. Every

year, tertiary institutions turn out thousands of

graduates in large mass with no absorptive capacity in

the labour market. Moreover, young people are more

likely to be employed in jobs of low quality, poor

working conditions, poor remuneration and engagement in

dangerous works or receive a short term informal

employment arrangements. The inadequate employment

situation of youths attracts a number of socio-

economic, moral and political vices such as armed

robbery, thuggery, vandalisation of government assets,

corruption, prostitution, wastage and underutilization

of human resource. The prevalence of unemployment has

birthed the presence of poverty in the nation.

Successive government has employed several strategies

to curb both challenges, but the results achieved so

far have not been remarkable.

Poverty in Nigeria is soaring with almost 100 million

of its population living less than a dollar per day

despite the country’s status of the largest market size3

in Africa. As the economy grows, the gap between the

rich and the poor widens and setting in poverty.

Poverty in Nigeria is paradoxical in the sense that as

the GDP figures rises each year, the proportion of

people wallowing in poverty also rise. According to the

National Bureau of Statistics (2011), the percentage of

Nigerians dwelling in absolute poverty (inability to

meet basic necessities of life) rose from 54.7 % in

2004 to 60.9% in 2010. Based on the same report, about

113 million Nigerians wallow in relative poverty.

All poverty indicators reveals that the Nigerian

government has failed to tackle the issue of poverty.

The absolute poverty measure unveils that about 60.9%

of the Nigerian populace are poor. The dollar per day

measure and subjective assessment measure puts Nigeria

poverty profile at 61.2 % and 93.9%. Besides, a more

reliable and trusted indicator which is the Harmonized

National Living Standard Survey (HNLSS) disclosed that

69% of Nigerians are poor.

The hallmark of poverty in Nigeria in unemployment.

Unemployment and poverty are interlinked that both are4

interchangeably used for one another. It is very

possible for someone to be employed and still be poor,

this clearly explains underemployment. Underemployment

is a subset of unemployment that reflects the failure

to utilize factor inputs (labour) to stimulating

economic growth. Low returns of labour and high rate of

unemployment generates poverty. Poverty makes it hard

to invest in human capital development that would boost

productivity.

Households also face inter-generational poverty trap.

They are faced with the dilemma of either sending their

children to school or to earn a sub-income. The social

negative effect of unemployment breeds a sense of

hopelessness. Structural unemployment and poverty are

one of the reasons for the prevalence of terrorism in

some regions of the country. Insecurity caused by the

deadly Boko-Haram sect and the Militants of the Niger

Delta can be traced to poverty and unemployment simply

because if all the youths are fully employed, none will

think of undertaking catastrophic acts.

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It can therefore be asserted that high poverty and

unemployment level poses greater threat to the nation’s

economic prosperity, security and peaceful co-

existence. Thus, a giant step must be taken by the

current administration at all levels to combat with

this menace.

1.2 STATEMENT OF THE

PROBLEM

An average Nigerian man is a poor man. Nigeria is a

nation mixed with affluence and penury which means that

large proportion of the country’s wealth is controlled

by the few elite leaving the masses with none. The

divergence of macroeconomic indicators and the day-life

experience is a source of concern. Macroeconomic

indicators are not accurate yardstick to estimate the

yearnings and needs of the people.

The essence of every administration is to make life

easier for the people. The true success of any

government is measured by its ability to reduce

poverty, create wealth and jobs, provide qualitative

6

education and health facilities and invest in human

capital formation. Without these, developmental realm

cannot be achieved.

1.3 OBJECTIVES OF THE

STUDY

The main objective of this research study is to

investigate critically the main determinants of poverty

in Nigeria.

1.4 RESEARCH QUESTIONS

The questions raised in this study are

i. Why is an average Nigerian poor and unemployed?

ii. What are the necessary effective strategies to be

taken by the government to reduce the high rate

of poverty and unemployment in Nigeria?

1.5 JUSTIFICATION FOR THE

STUDY

Poverty and Unemployment is as old as man. Both evils

are present in every economy even in the advanced

economies of the world. Many a research study only

7

focuses on the poverty and unemployment on economic

growth. This study expands the frontiers by

investigating the specific factors that causes poverty

in Nigeria. It is no doubt that the study will be

useful for the monetary and public authorities,

financial and non-financial institutions, academics and

relevant stakeholders in making sharp policies in

curbing it. It will also be beneficial for students and

other researchers in their future research

undertakings.

1.6 SCOPE OF THE

STUDY

The study x-rays the impact of poverty and unemployment

on growth and also examines the determinants of poverty

in Nigeria. The study makes use of secondary data from

the Central Bank of Nigeria statistical bulletin. The

years to be reviewed in the study ranges from 1985-

2013.

1.7 ORGANISATION OF THE STUDY

The study has been broken into five parts. The first

chapter presents the introduction. The second and third

provides the literature review and research methodology8

and model specification respectively. While the fourth

and last section explores the presentation and

interpretation of results and conclusion and relevant

policy recommendation.

9

CHAPTER TWO

REVIEW OF RELATED LITERATURE AND THEORETICAL FRAMEWORK

2.1 THE CONCEPT OF UNEMPLOYMENT

One of the challenges obstructing Nigeria from

attaining the height of economic development is the

high rate of unemployment experienced over years. The

total labour force encompasses people between the ages

of 15-64, excluding students, home keepers, retired and

those who are disinterested from working. Unemployment

or perhaps the unemployed are group of people who are

capable and qualified to work but unable to find job to

earn a means of livelihood.

Earlier school of economic thought gave much attention

to the issue of unemployment and treated it as

something undesirable and injurious to the economy.

Economists from the era of Adam Smith to Karl Marx down

to Keynes expressed varying degree of concern to

unemployment. The population in a country is into two

that is the working population and the dependent

10

population. The working population or the economically

active population includes those who are actively

employed plus those who are unemployed (willing and

able to work). The economically inactive population

constitutes those who are neither working nor willing

to work (Njoku, 2011).

The International Labour Organization (ILO) defined the

unemployed as the number of the economically active

population who are currently without work but actively

seeking for job, also including those who voluntarily

left their job and those who were sacked from their

work. The application of this definition has be

criticized , mainly for the purpose of comparison and

policy formulation, as different nations have varying

zeal of commitment in tackling the menace (Akintoye,

2008). Moreso, housewives, who are willing and able to

work, the definition of the age bracket stands as a

limitation to the definition given by the ILO

(Douglason and Gbosi, 2006).

Unemployment serves as an impediment to social

progress. It represents a total wastage of a country’s

manpower resources. It leads to welfare loss in terms

11

of productivity thereby reducing income and living

standard (Raheem, 1993). Unemployment is a serious

issue facing all the countries of the world especially

among the less developed countries in general (Rama,

1998) and the Sub-Saharan African countries in

particular (Umo, 1986).

2.1.1 FORMS OF UNEMPLOYMENT

The creation of full employment is a common

macroeconomic goal every nation strives to achieve.

However, full employment does not imply a zero

unemployment rate. Full employment can be said to be

achieved when the unemployment rate is minimally low

(between 3-4%). Every dynamic economy will certainly

have some unemployment, which is not harmful. The

commonest types of unemployment are structural

unemployment, cyclical unemployment, frictional

unemployment, disguised unemployment, seasonal

unemployment, residual unemployment, voluntary

unemployment and involuntary unemployment

Structural Unemployment:

12

Changes occur in market economies such that demand

increases for some job skills while other job skills

are outdated and are no longer in demand. Structural

unemployment is said to occur when there is a mismatch

between the worker’s skill and technological

advancement.

Frictional Unemployment:

This type of unemployment occurs because of workers who

are voluntarily between jobs. Some are looking for

better jobs. Others may be moving to a different

geographical area for personal reasons and time must be

spent searching for a new job.

Cyclical Unemployment:

This occurs due to downturn in overall business

activity usually during a recession or deep depression.

During a recession, total productivity will decline and

as such there will be less demand for labour simply

because less labour will need to produce less output.

Disguised Unemployment:

13

Disguised unemployment exists frequently in developing

countries whose large population creates a labour

surplus in the labour force. When more people are

working than is necessary, the overall productivity of

each individual drops. Disguised unemployment is

characterized by low productivity and frequently

accompanies informal labour markets and agricultural

labour markets, which can absorb substantial quantities

of labour.

Seasonal Unemployment:

Seasonal unemployment occurs when there is a limited

need for a kind of work to be performed during a

particular period during the year based on some factors

like deadlines or climate.

Residual Unemployment:

It is the kind of unemployment that remains in periods

of full employment, as a result of those physically,

mentally or emotionally unfit to work.

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Voluntary and Involuntary Unemployment:

Voluntary unemployment is a situation when a person is

unemployed not because of not being able to find

employment, but due to the fact of being unable to find

his/her own desired job. Sometimes, people reject

employment opportunities if they do not receive the

desired wages or if they are not offered the kind of

work they wish to do.

On the other hand, involuntary unemployment occurs when

a person is willing to work at the prevailing wage rate

yet unemployed. It is different from voluntary because

workers choose not to work because their reservation

wage is higher than the prevailing wage. In an economy

with involuntary unemployment, there is usually surplus

of labour at the current wage rate.

Underemployment:

It is a situation in which a worker is employed but not

in the desired capacity whether in terms of

compensation, hours, skills and experience. It occurs

when a worker is working for longer hours with a low

pay in commensuration with his qualification and skill.

15

Technically, unemployed and underemployed often compete

for available jobs.

2.1.2 THEORIES OF UNEMPLOYMENT

Economists from time memorial have postulated different

theories as regard unemployment. Different school of

thought conceived unemployment from different angle but

the bottom line remains the same that unemployment

decreases national output. The theories of unemployment

are

Classical Theory of Unemployment:

Classical unemployment occurs when the real wages are

kept above the market clearing wage, leading to surplus

of labour supplied. The classical economists believed

that unemployment exists because the current wage rate

is higher than the wage rate employers are willing to

pay their workers. Classical unemployment indicates

that the prevailing market wage rate is too high. They

proposed that if wages are more flexible (market-

determined by the invisible hand), unemployment will be

solved.

Neo-Classical Theory of Unemployment:

16

The neo-classical theorists alluded that the labour

market is similar to market for any tangible products.

According to them, unemployment is voluntary, that is

workers are unemployed because they have not found

their suitable and desired job or their wage cannot be

reduced by their employers due to national labour laws.

This reflects the inability of the labour market to

operate under perfect competition either because there

are monopolistic trends in the market or workers have

limited information about the position to be filled in.

The inflexibility of setting wages downwards and the

lack of information leads to an unstable market

equilibrium. They proposed that conditions that will

bring the existence of a perfect competitive labour

market where wages will be determined by the supply and

demand for labour should be established to terminate

unemployment.

Keynesian Theory of Unemployment:

17

This is a situation where low wage rates should produce

higher employment levels, but don’t because the economy

is in recession and the employers are facing low demand

for their goods and service, consequently demanding for

low amount of labour. Keynes saw the lack of demand for

jobs as potentially resolvable bythe government by

raising its aggregate expenditure.

Okun’s Law

Arthur Okun proposed the empirical observed

relationship between unemployment and losses in a

country’s production. The gap version states that for

every 1 percent increase in the unemployment rate, a

country’s GDP will be roughly an additional 2 percent

lower than its potential GDP. The difference version

describes the quarterly change in real GDP and

unemployment. The stability and application of the law

has been criticized.

Okun’s law is rather an empirical observation rather

than a result derived from theory. Okun’s law is

approximate because factors other than employment such

as productivity affect output. In Okun’s original

18

statement of his law, 2 percent output increase

corresponds to a 1 percent fall in cyclical

unemployment rate. A 0.5 percent increase in labour

force participation, a 0.5 percent increase in hours

worked per worker and 1 percent in output per hour

worked (labour productivity).

Okun’s law states that a point increase in cyclical

unemployment rate is associated with two percentage

points of negative growth in real GDP. The relationship

depends on the country and time period under

consideration. The relationship has been tested by

regressing GDP or GNP growth on the change in the

unemployment rate. Martin Prachowny estimated about a 3

percent fall in output for every 1 percent increase in

unemployment rate. He asserted that majority of this

change in output is attributable to changes in other

factors like capacity utilization and hours worked

other than unemployment. Holding these other factors

constant reduces the association between unemployment

and GDP to around 0.7 percent for every 1 percent

change in unemployment rate (Prachowny, 1993).

19

There are several reasons why GDP may rise or fall more

rapidly than a rise or fall in unemployment rate. As

unemployment increases

a.A reduction in the multiplier effect created by the

circulation of money from employees.

b.Unemployed persons may drop out of the labour force

after which they are no longer counted in

unemployment statistics.

c.Employed persons may work for shorter hours.

d.Labour productivity may decrease, because employers

retain more workers than they need.

2.1.3 FACTORS ATTRIBUTABLE TO HIGH UNEMPLOYMENT RATE

IN NIGERIA

Unemployment in Nigeria is pervasive among the youths.

Over 65 percent of the Nigerian youths are unemployed

and if plans are not made to tackle this menace by the

youths, government and other stakeholders, the

situation will become incurable. The number of

applicants for the Nigeria Immigration Service aptitude

test that took place on the 15th March, 2014 is a

testament that unemployment is by and large a national

20

insult to the Nigerian economy. Policy makers should be

more interested in knowing the factors responsible for

the high unemployment situation and providing several

ways to resolve it. Some of the factors responsible for

this ‘evil monster’ are

Poor Educational Policy and Poor Personal Development

of the Youth

It is quite unfortunate that the curricula used in the

Nigerian tertiary institutions of learning are in

concordance with the demands of employers in the labour

markets. Anybody who wants to be employable must be

knowledgeable and conversant with the current trends

within and outside of his area of discipline.

On the other hand, most youths or perhaps graduate

cannot write understandably well and speak fluently.

Some of them are not proficient with the use of

computer and they are aware that any job that must be

gotten in this ‘jet-age’ needs a sound knowledge of

computer, hence they become unemployable.

Lack of Infrastructures

21

Nigeria is a consuming (import-oriented) nation rather

than a producing nation. It is when the country turns

to a diversified producing economy that more jobs can

be created. The manufacturing, agriculture and

construction sectors are the one that can create more

jobs and this will have a multiplier effect on the

economy. These sectors can meaningfully contribute to

GDP when infrastructures like roads, railway, water,

power supply, telecommunications and financial services

are put in place.

Poor Leadership

Past leaders of the country should have projected the

current state of unemployment in the country and made

strategic plans to mitigate its prevalence. Proceeds

realized from crude oil should have been diversified

into other sectors of the economy. Policies to create

small scale businesses to the unemployed youths and

widows should have been implemented, but it is a pity

that Nigerian leaders are personal-interest driven and

greed oriented.

Corruption

22

Corruption is one of the big troubles confronting the

economic progress of the nation. Though, people’s

perception towards corruption is that it kills economic

growth and development, in contrary, a school of

thought stressed that corruption can improve the growth

and wealth of a nation if the money and funds embezzled

are spent on productive and meaningful projects rather

than siphoning it into their personal bank accounts. It

is crystal clear that almost Nigeria leaders embezzle

public funds, but at least the fund embezzled should be

invested via establishing industries and giving of

grants and capital for setting up of small and medium

scale businesses. The few available vacancies in the

civil service or government agencies should be based on

‘qualification and competency’ rather ‘connection or

long-leg’.

Others reasons amongst others are lack of savings and

investment trait, incompetent business skills and

administration and bad attitude to work and

unattractiveness of the agricultural sector

23

2.1.4 UNEMPLOYMENT PROFILE IN NIGERIA

Table 1: Unemployment Rate in Nigeria (1985-

2013)

Year UnemploymentRate (%)

1985 6.11986 5.31987 7.01988 5.31989 4.51990 3.51991 3.11992 3.41993 2.71994 2.01995 1.8

24

1996 3.41997 3.21998 3.21999 3.12000 4.72001 4.22002 3.02003 14.82004 13.42005 11.92006 14.62007 12.72008 14.92009 19.72010 21.42011 23.92012 25.72013 23.9

Source: Economic Watch (2014)

Figure 1: Trend of Unemployment Rate (%) in Nigeria

(1985-2013)

25

2.2 CONCEPT OF POVERTY

There is no precise and specific definition of poverty

because it cut across different aspects from life

spanning from physical, moral and to psychological of

human conditions. Different yardsticks have been

devised to explain poverty. Poverty is the inability to

meet basic needs (Watts, 2000). However, the term

26

‘needs’ is defined differently across different

cultures and generations as technology and changing

values alter the pre-requisites of an acceptable

standard of living. This indicates that the concept of

needs includes the notion of what is traditionally

regarded as necessary to lead one’s life as an

integrated member of a particular society. Baratz and

Grisby (1972) defined poverty as a condition involving

the some deprivation and adverse occurrences that are

closely related with inadequate economic resources.

Edozien (1975) argued that poverty is the inadequacy of

income to support a minimum standard of living.

The conventional definition is the inability to secure

basic needs of life. Other scholars’ angled poverty in

terms of basic needs approach such as child mortality,

maternal maternity, prevalence of epidemic, life

expectancy and quality of education and health care

facilities. Poverty to Grusky and Kanbour (2006) is the

occurrence of falling below a given income/consumption

level or poverty line. Poverty has been defined

multidimensional using some approaches like the basic

need approach, the capability approach and human

27

development approach. The most widely accepted one is

the human development index approach set by the United

Nations Development Programme (1990) which constitutes

the three vital part of human development namely life

expectancy, educational attainment and standard of

living.

Poverty is the inability to meet the three core-values

of development which are life sustenance, self-esteem

of the people and freedom from servitude. It is the

severe deprivation of basic needs of life and

fundamental human right. It is a plague that affects

all countries of the world but more pervasive in less

developed countries. Poverty based on the World Bank

definition, is the inability of an individual to earn

below a dollar (the international poverty line) in a

day.

Olayemi (2012) conceptualized poverty into four

components namely lack of access to basic goods and

services, lack of impaired access to productive

resources, inefficient use of common resources and

exclusion mechanism effect. Poverty as a lack to basic

needs is economic and consumption oriented. It explains

28

poverty in material terms and adopts consumption based

approach to identify the extremity of poverty and

distinguish the poor from the non-poor. The poor are

the individuals in the society incapable of purchasing

basic goods and services in the society. Impaired

access to productive resources sees poverty as the

inability to have access to agricultural land, physical

capital and financial asset which leads to low

disposable income, low productivity, low savings and

low investment. It also focuses on the extent to which

individual can utilize his available resources to

improve his material wellbeing. Poverty is the outcome

of common resources used inefficiently due to weak

policy formulation, inadequate infrastructure and low

technical knowhow. All these translate to low

productivity and hence low output growth. Lastly,

poverty can be due to certain mechanism in the system

excluding individuals from contributing to economic

development including in a democratic political

setting. For instance, the discomfort index

(composition of unemployment and inflation rate),

though of low economic importance but used by

29

politicians to present their scorecard to the public or

to criticize their opponents policies and performance.

2.2.1 MEASURMENT OF POVERTY

There are many approaches to measuring poverty. Among

them are

Relative Poverty Measurement

Relative poverty is defined by reference to the living

standards of majority in a given society that separates

the poor from the non-poor. Households with

expenditure greater than two-thirds of the total

household per capita expenditure are non-poor whereas

those below it are poor. Furthermore, households with

expenditure less than one-third of the total household

per capita expenditure are core-poor or extreme poor

while households with more than one-third but less than

two-thirds of the total expenditure per capita are

moderate poor. Accordingly, the poor category is sub-

divided into those in extreme poverty and moderate

poverty, where extreme poverty is more severe than

moderate poverty. Those in moderate poverty are

constituted by the growing middle class who are at the

30

point of moving to the non-poor category. Also, the

non-poor is also grouped into two namely the fairly

rich and the very rich (NBS report, 2012). The National

Bureau of Statistics report on poverty (2012) unveiled

that relative poverty in Nigeria as at 2004 stood at

54.4 percent (68.7 million out of 126.3 million people)

but rose to 69 percent in 2010 (approximately 112.5

million people out of 163 million people). The North -

West and North- East geo-political zone had the highest

poverty rate in the country with 77.7 percent and 76.3

percent respectively. The South-West zones recorded the

least poverty rate of 59. 1 percent. Among the states,

Sokoto received the highest poverty rate of 86.4

percent while Niger state had 43.6 percent poverty rate

(NBS, 2012). It can therefore be said that poverty is

more prevalent in the North-West zone and less rampant

in the South-West zone.

Table 2: Relative Poverty Headcount

(1980-2010)

Year Poverty Rate(%)

Population(million) inPoverty

EstimatedTotalPopulation(million)

31

1980 27.2 17.1 651985 46.3 34.7 751992 42.7 39.2 91.51996 65.6 67.1 102.32004 54.4 68.7 126.32010 69.0 112.5 163Source: Harmonized National Living Standard Survey

(2010).

Absolute Poverty Measurement

It is defined in terms of the minimum requirements

necessary to afford minimal standards of food,

clothing, healthcare and shelter. Using this measure,

54.7 percent of Nigerians were living in poverty in

2004 and rose to 60.9 percent in 2010 (99.3 million

Nigerians). Among the geo-political zones, the North-

West and North-East recorded the highest poverty rate

of 70 percent and 69 percent respectively while the

South-West had the least poverty rate of 49.8 percent.

At the state level, Sokoto had the highest poverty rate

of 81.2 percent while Niger state recorded the least

poverty rate of 33.8 percent.

The Dollar-Per Day Measurement

32

This refers to the proportion of those living on less

than $1 per day poverty line. With this approach, 51.6

percent of Nigerians were living below $1 per day in

2004, but increased to 61.2 percent in 2010. Although,

the World Bank standard according to the NBS report in

2012 has to be marginally raised to $1.25 in opposition

to the $1 used when the survey was conducted. The

North-West geopolitical zone recorded the highest

poverty rate of 70.4 percent while the South-West

region has the least rate of 50.1 percent. At the state

level, the Sokoto state recorded the highest poverty

rate with 81.9 percent, while Niger state has the least

poverty rate standing at 33.9 percent (NBS report,

2012). Out of the 6 geopolitical zones, poverty is more

prevalent in the North-West but this does not mean that

poverty is not pervasive in other geopolitical zones.

Table 3: Incidences of Poverty by

Zones (%)

33

Zones AbsolutePoverty

RelativePoverty

Dollar PerDay

NorthCentral

59.5 67.5 59.7

North East 69.0 76.3 69.1North West 70.0 77.7 70.4South East 58.7 67.0 59.2South South 55.9 63.8 56.1South West 49.8 59.1 50.1 Source: Harmonized Living Standard Survey, 2010.

Subjective Assessment Poverty Measurement

This involves inquiring from the populace through their

opinions on whether they themselves think they are poor

or not.

Gini-Coefficient

This is a yardstick used to measure the degree of

income inequality in a given society at a particular

period of time. Income disparity and poverty are

interlinked. A country with a high degree of income

disparity will have poverty at its doorstep, because

the margin between the rich and the poor will widen

profusely. The gini coefficient or index ranges between

0 and 1. The higher the gini index, the more the

34

incidence of income disparity in such society. Gini

index of 0 is perfect equality (where all the citizens

earn the same income) and 1 is perfect inequality

(where one person earns all the income and others earn

zero income). Moreover, both cases are unrealistic.

2.2.2 CAUSES OF POVERTY IN NIGERIA

The main causes of poverty in Nigeria are unemployment,

ignorance, high inflation, environmental degradation,

high population growth, poor governance and the like.

Poverty is more pervasive in the rural regions and more

precisely in the North West geo-political zone. The

major causes of poverty in the rural region are use of

outmoded and inefficient system in agriculture and

craft. Others factors responsible for low income in the

rural areas according to Abubakar (1995) include

inadequate infrastructures, lack of credit and

marketing facilities, unfavorable rural institutions as

regard land tenure, illiteracy, ignorance and cultural

and institutional rigidities. Williams (1984) has also

identified lack of viable non-farm employment

opportunities in the rural sector thereby leading to

overcrowding on the land and underemployment of labour.

35

It should be added that even though alternative

occupations like traditional craft and petty trading do

exist in most villages, yet investigations have showed

that incomes realized from these occupation is still

identical to the income gotten from farming.

In addition to the scarcity of renemeruative non-

farming occupations during the dry season, Hill (1982)

mentioned the following additional factors as chief

causes of poverty particularly in a rural Hausa setting

i. Limitation of the farming season

ii. The unreliability of the climate especially as it

concerns annual and erratic distribution of

rainfall within the famine season.

iii.The underutilization of labour resources during

the famine season resulting from the inability of

many poor farmers to farm on a scale which

matches their labour resources and rudimentary

nature of the system of farm-labour employment

and the dire shortages of working capital, which

severely limits the scale and productiveness of

farming especially where the cultivation of the

36

manure farmland is the preferred agronomic

system.

Unfavourable physical environmental conditions such as

land desertification in the North, water hyacinth in

inland waterways and oil spillage in the Niger Delta,

have contributed to the economic fortune of the

inhabitants of those areas of the country, thereby

worsening their level of poverty. Abubukar (2002)

stated in corrobation that 35 percent of the country’s

land mass in the North has been desertificated. In

addition to this, unemployment is the major cause of

poverty in Nigeria. Unemployment has aggravated the

incidence of poverty in Nigeria. Abubakar (2002) noted

that between 1985 and 1996, the tertiary institutions

in Nigeria turned out 1,110,000 graduates and only

90,000 (8.2 percent) were able to secure formal jobs

which rendered the remaining 93.8 percent jobless or

underemployed during the period.

The National Bureau of Statistics (1996) noted that the

main causes of poverty in Nigeria are unemployment,

inflation rate, illiteracy, economic mismanagement,37

poor governance, corruption, insecurity, high external

debt burden, high incidence of diseases, population and

environmental degradation. In concordance, Ajakaiye

and Adeyeye (2001) alluded that the causal factors of

poverty are low economic growth, macroeconomic shocks,

policy failures; labour market deficiency, unemployment

and underemployment lag in human development, debt

burden, disease, environmental degradation and criminal

acts. Abubakar (2002) captured the poverty occurring

factors as macroeconomic distortions, corruption, bad

governance, bad debt, socio-economic factors, physical

environment and high population growth.

2.2.3 POVERTY PROFILE IN NIGERIA

Poverty is still rampant in the Nigerian economy.

Statistics revealed that poverty incidence in Nigeria

has been alarming since the 1980s. The United Nation

Development Programme Report (2010) stated that between

1980 and 1996, the percentage of the core-poor rose

from 6.2 percent to 29.3 percent and declined to 22.0

percent. There is the geographical dimension of

poverty in Nigeria. According to Aigbokhan (2000),

poverty is severe in the rural areas than in the urban

38

areas. In 2004, 67 percent of the urban populace had

access to potable water whereas in the rural areas, 31

percent had access to such. In addition to this, 53

percent of the urban dwellers had access to sanitation

services while 36 percent of the rural populace was

accessed to that (World Bank, 2002). This fact

justified the reason for the prevalence of disease in

the rural areas simply because the living condition is

extremely low in the areas.

Garba (2002) alluded that the World’s per capita income

was $7140 in 2003. Nigeria’s per capita income in 2003

was $290, therefore making Nigeria one of the poorest

nations in the world. This relegated Nigeria to the

league of other poor nations like Togo ($270), Rwanda

($220) and Mali ($210). Other indicators of development

such as the life expectancy ranked Nigeria 155th out 177

countries in the world and infant mortality rate ranked

Nigeria 148th out of 173 countries further buttressed

the fact that Nigeria is paradoxical in nature-rich

country, poor people (CIA, 2009).

According to the Earth Trends (2003), 70.2 percent of

Nigerians live less than $1 in a day and 90.8 percent

39

live less than $2 daily. The total income earned by the

top 20 percent of the population is 55.7 percent while

the total income earned by the bottom 20 percent is 4.4

percent. This explains the alarming increase in poverty

and the sharp inequality between the rich and the poor.

Bayelsa state which has the highest welfare per capita

in Nigeria, recorded 26.2 incidence of poverty between

1995 and 2006 is still below the state that has the

highest welfare per capita in other countries like

Accra, Ghana (2.4 percent), Douala, Cameroun (10.9

percent), Baoteng, South Africa (19.0 percent) (World

Bank, 2008). Using selected world development

indicators, the life expectancy at birth in 2006 for

male and female in Nigeria was 46 and 47 years

respectively. Between 2002 and 2007, 27.2 percent of

children under the age of five were malnourished

compared to 3.7 percent of the same indicator in

Brazil. The mortality rate of children below the age of

five in Nigeria was 191 per 1000 births in 2006. The

situation is alarming compared to 69 per 1000 births in

South Africa, 108 per 1000 births in Togo, 120 per 1000

birth in Ghana and 149 per 1000 births in Cameroun

(World Bank, 2008). This implies that there is a40

general high level of poverty in Nigeria. Poverty is

plentiful amidst the poor in the Nigerian society.

Nigeria is the 8th largest oil producing nation in

Nigeria and has the largest gross domestic product in

the African continent but contains the largest

proportion of the poor in the Sub-Saharan region. There

is a wide income disparity between the rich and the

poor which has resulted in the resources of the nation

in the hands of the few rich.

2.2.4 EFFECT OF THE PREVALENCE OF POVERTY AND

UNEMPLOYMENT

Poverty and unemployment are the developmental

challenges behind the economic stagnancy of Nigeria.

Poverty and unemployment are interlinked and are

positively correlated with one another. The effect of

poverty and unemployment in the economy is adverse.

Abubakar (2002) believed that poverty is always

associated with unemployment and in conjunction they

produce unpleasant socio-economic repercussion.

Poverty and unemployment destroy hope, aspirations,

self esteem, sense of personal competency and

41

happiness. They lead to religious clashes, ethnic

violence, terrorism, insecurity, prostitution,

disorder, armed robbery, social disorder, human

trafficking, loss of output and income, para-suicide,

depression, gangsterism, and personal hardship, waste

of human skills and resources, child labour, abuse of

human and civil rights and brain drain where highly

skilled and educated Nigerians migrate to other

countries in search for greener pastures.

2.2.5 POVERTY ALLEVIATION STRATEGY IN

NIGERIA

Successive administrations in Nigeria have formulated

various policies and programme to alleviate and reduce

the incidence of poverty via the activities of its

ministries and agencies, partnering with international

agencies and through the creation of agencies with the

exclusive goal on tackling the rising rate of poverty

and unemployment. At the inception of the Obasanjo

administration, the Joda panel was established to

review various poverty eradication programmes initiated

by the previous administrations. Some of the agencies

42

created by the past administrations before the return

of democracy in 1999 were

i. The National Directorate of Employment (NDE)

ii. Peoples Bank of Nigeria (PBN)

iii.Nigerian Agricultural and Cooperative Bank Ltd

(NACB)

iv. Nigerian Agricultural Insurance Corporation

(NAIC)

v. National Commission for Nomadic Education (NCNE)

vi. National Primary Healthcare Development Agency

(NPHDA)

vii.National Agricultural Land Development Authority

(NALDA)

viii. National Commission for Mass Literacy, Adult

and Non-Formal Education

ix. Federal Agricultural Coordinating Unit (FACU)

x. Directorate for Food, Roads and Rural

Infrastructures (DFRRI)

xi. Agricultural Projects Monitoring and Evaluation

Unit (APMEU)

xii.Family Economic Advancement Programme (FEAP)

xiii. Industrial Development Centre (IDC)

43

xiv.Federal Department of Rural Development (FDRD)

xv. Federal Ministry of Agriculture, Water Resources

and Power and Steel

xvi.River Basin Development Authorities (RBDAs)

xvii. Family Support Trust Fund (FSTF)

xviii. National Centre for Women Development (CWD)

xix.Nigerian Industrial Development Bank (NIDB)

xx. Nigerian Import-Export Bank

xxi.Nigerian Bank for Commerce and Industry (NBCI)

xxii. Nigerian Economic Reconstruction Fund

xxiii. Green Revolution (GR)

xxiv. Operation Feed the Nation (OFN)

Others are

i. National Empowerment for Economic and Development

Strategy (NEEDS)

ii. National Poverty Eradication Programme (NAPEP)

iii.Poverty Alleviation Programme (PAP).

It is worthwhile to know that the programmes and

agencies aforementioned are saddled with the core-

responsibility of tackling poverty directly or

indirectly (through employment generation). Some of

the commonest programmes are explained below

44

Rural Basin Development Authorities (RBDAs)

It was established by Decree 37 of August 1976 during

Muritala Muhammed Administration. It is one of the

earliest attempts to combat with poverty through

improved agricultural production. The main goal of

RBDAs is the economic exploitation and management of

land and water resources of their respective areas of

operation with particular but varying emphasis on the

development of agriculture, fishing and human

settlement, infrastructural facilities and the

improvement of the environment.

Operation Feed the Nation (OFN)

OFN was initiated in 1979 by General Olusegun

Obasanjo. The programme attempted to eradicate poverty

through increasing food production on the premise that

availability of food will raise the nutritional level

of the ordinary Nigerian and invariably lead to high

per capita income and standard of living. OFN lasted

till the emergence of the civilian administration of

AlhajiShehuShagari in 1979.

45

Green Revolution (GR)

The programme founded by ShehuShagari in 1979 shared

the same objective of tackling poverty through

increased food production with the preceding military

administration of General Olusegun Obasanjo.

Directorate for Food, Roads and Rural Infrastructure

(DFRRI)

DFRRI was introduced by Ibrahim Babaginda during his

administration that lasted between 1985 to 1992. DFRRI

sought to open up rural areas through construction of

feeder roads and provision of basic amenities that

would turn them into production centers for the

national economy.

National Directorate of Employment (NDE)

It is an indirect measure taken by the government to

tackle poverty via creation of jobs.

National Empowerment for Economic and Development

Strategy (NEEDS)

NEEDS was designed in 1999 during the Obasanjo

civilian administration. The focus of the programme is46

to trigger the nation to economic development through

reducing poverty, generating job opportunities,

creating wealth and value.

National Poverty Alleviation Programme (NAPEP)

It was introduced in early 2001 and remains the

current programme with the core-goal of eradicating

absolute poverty in Nigeria. NAPEP is supplemented by

the National Poverty Eradication Council (NAPEC),

which is saddled with the duty of coordinating

poverty-reduction related activities of all relevant

ministries, parastatals and agencies. It has the

mandate to ensure that wider range of activities is

centrally planned, co-ordinate and complement one

another so that the goals of policy continuity and

sustainability are achieved.

NAPEP encompasses four schemes namely

Youth Empowerment Scheme (YES)

This deals with capacity acquisition, mandatory

attachment, productivity improvement, credit delivery,

technology development and enterprise promotion.

Rural Infrastructure Development Scheme (RIDS)

47

This deals with the provision of potable and

irrigation water, transport (rural and urban), rural

energy and power support.

Social Welfare Service Scheme (SOWESS)

This deals with special education, primary healthcare

services, establishment and maintenance of recreation

centers, public awareness facilities, youth

development, environmental protection facilities, food

security provision, micro and macro credit delivery,

rural telecommunications facilities, and provision and

maintenance of mass transit.

National Resources Development and Conservation Scheme (NRDCS)

This deals with the harnessing of the agricultural,

water, social mineral resources, conservation of land

and space (beaches and reclaimed space) particularly

for the convenient and effective utilization by small

scale operators and immediate community. In short,

NAPEP is concerned with youth empowerment, rural

infrastructure development, provision of social

welfare services and natural resources development

conservation.

Poverty Alleviation Programme (PAP)48

PAP was an interim measure designed in 2000 to address

the problem of rising unemployment and crime incidence

particularly among the youths. It was targeted at

improving the material wellbeing of the populace. The

primary goals of PAP are to reduce the problem of

unemployment and raise effective demand in the

economy, boost productivity and lastly to reduce the

level of crimes in the country. In line with these

goals, PAP is targeted to

i. Provide at least 200,000 jobs for the unemployed

ii. Creating a credit system in which farmers will

have easy access to loans, aids and grants.

iii.Raise adult literacy rate from 51 to 70 percent

by the year 2003

iv. Increasing health care delivery system

v. Training of at least 60 percent tertiary

institution graduates

vi. Establishing and developing small and medium

scale businesses.

It is unfortunate that as strategic these programmes

were, it failed to reduce the rate of poverty, create

job opportunities and empowerment and material

wellbeing of the people. Collin (2003) stressed that a49

number of factors militated against the delivery of

various poverty eradication programmes. The factors

were lack of targeting mechanism for the poor (most of

the programmes were not poor-focused), political

instability, frequent policy changes, inconsistent

implementation, inadequate co-ordination of various

programmes which have resulted in each institution

carrying out its own activities with resultant

duplication of efforts and inefficient use of the

limited resources. Antai (2007) added that severe

budgetary, management and governance problems have

afflicted most of the programme resulting in facilities

not completed, broken down, abandoned and ill-equipped.

Also lack of accountability and transparency made the

programme serve as a pipe for draining natural

resources. In addition, over-extended scope of

activities of institutions resulted in resources being

spread too thinly on too many projects. Example of such

is DFRRI and Better Life for African Women Development

which covered almost every sector and overlapped with

many existing programmes.

2.2.6 HUMAN DEVELOPMENT INDEX (HDI)

50

The HDI was created to emphasize that people and their

capabilities should be the ultimate criteria for

assessing the development of a country and not economic

growth alone. The HDI can be used to question national

policy choices asking how two countries with the same

level of per capita income can end up having different

human development outcomes. These contrasts can

stimulate debate about government policy priorities.

The human development index is a summary measure of

average achievement in key dimensions of human

development namely long and healthy life, being

knowledgeable and enlightened and having a decent

standard of living. The HDI is a geometric mean of

normalized indices for each of the three dimensions.

The health dimension is assessed by life expectancy at

birth component of the HDI is calculated using a

minimum value of 20 years and a maximum value of 85

years. The education component of the HDI is measured

by the mean of years of schooling for adults aged 25

and expected years of schooling for children of school

entering age. Mean years of schooling is estimated by

UNESCO institute for statistics based on educational

51

attainment data from censuses and surveys available in

its database. Expected years of schooling are capped at

18 years. The indicators are normalized using a minimum

value of zero and maximum aspirational values of 15 and

18 years respectively. The two indices are combined

into an education index using arithmetic mean.

The standard of living dimension is measured by the

gross national income per capita. The goalpost for

minimum income is $100 (PPP) and the maximum value is

$75000 (PPP). The minimum value for GNI per capita set

at $100 is justified by the considerable amount of

unmeasured subsistence and nonmarket production in

economies close to the minimum that is not captured in

the official data.

The HDI uses the logarithm of income to reflect the

diminishing importance of income with increasing GNI.

The scores of the three HDI dimension indices are

aggregated into a composite index using the geometric

mean. The HDI varies between 0 and 1. HDI value of more

than 0.8 signifies a very high human development. HDI

value between 0.799-0.700 represents high human

development. HDI value between 0.699-0.560 connotes

52

medium human development while HDI value below 0.560 is

represents low human development. The HDI index does

not reflect on inequalities, poverty, human security,

empowerment and gender disparity.

The table below shows the human development index and

its components of Nigeria compared with other African

nations as at the year 2012.

Table 4: Human Development Index and its Components

(2013)

WorldRank

Country 2013HDI

2013LifeExpectancy atBirth

2013MeanYearsofSchooling

2012ExpectedYearsofSchooling

2012GNIPerCapita($)

2012HDIIndex

55th Libya 0.784

75.3 7.5 16.1 21,666

0.789

63rd Mauritius

0.771

73.6 8.5 15.6 16,777

0.769

71st Seychelles

0.756

73.2 9.4 11.6 24,632

0.755

90th Tunisia 0.721

75.9 6.5 14.6 10,440

0.719

93rd Algeria 0.717

71.0 7.6 14.0 12,555

0.715

109th Botswan 0.68 64.4 8.8 11.7 14,7 0.68

53

a 3 92 1110th Egypt 0.68

271.2 6.4 13.0 10,4

000.681

112th Gabon 0.674

63.5 7.4 12.3 16,977

0.670

118th SouthAfrica

0.658

56.9 9.9 13.1 11,788

0.654

123rd CapeVerde

0.636

75.1 3.5 13.2 6365 0.635

127th Namibia 0.624

64.5 6.2 11.3 9185 0.620

129th Morocco 0.617

70.9 4.4 11.6 6905 0.614

138th Ghana 0.573

61.1 7.0 11.5 3532 0.571

140th Congo 0.564

58.8 6.1 11.1 4909 0.561

141st Zambia 0.561

58.1 6.5 13.1 2898 0.554

143rd SaoTime &Principle

0.558

66.3 4.7 11.3 3111 0.556

144th EquatorialGuinea

0.556

53.1 5.4 8.5 21,972

0.556

147th Kenya 0.535

61.7 6.3 11.0 2158 0.531

148th Swailizand

0.530

49.0 7.1 11.3 5536 0.529

149th Angola 0.526

51.9 4.7 11.4 6323 0.524

151st Rwanda 0.50 64.1 3.3 13.2 1403 0.50

54

6 2152nd Camerou

n0.504

55.1 5.9 10.4 2557 0.501

153rd Nigeria 0.504 52.5 5.2 9.0 5353 0.500Source: UNDP Report (2013)

2.2.7 MULTIDIMENSIONAL POVERTY INDEX

The multidimensional index (MPI) was developed in 2010

by the Oxford Poverty and Human development initiative

and the United Nations Development Programme. It uses

different factors to determine poverty beyond based

income levels. The MPI is an international measure of

acute poverty covering over 100 developing economies.

It supplements traditional income-based poverty

measures by capturing the severe deprivations that each

person faces at the same time with respect to

education, health and living standards. The MPI

assesses poverty at individual level. If someone is

deprived in a third or more of ten (weighted)

indicators, the global index identifies them as ‘MPI

poor” and the extent or intensity of their poverty is

measured by the number of deprivations they are

experiencing. The MPI can be used to create a

comprehensive picture of people living in poverty and

55

permits comparisons both across countries, regions and

the world and within ethnic group, urban/rural location

as well as other key household community

characteristics. This makes it an invaluable tool to

identify the most vulnerable people – the poorest among

the poor, revealing countries and overtime, enabling

policy makers to target resources and design policies

more effectively.

The index uses the same three dimensions as the Human

Development Index; health, education and living

standards. These are measured using ten indicators

which are health (child mortality, nutrition),

education (years of schooling, school attendance),

living standards (cooking fuel, sanitation, water,

electricity, floor and asset). Each indicator is

equally weighted. A person is considered poor if in at

least a third of the weighted indicators of poverty

denotes the proportion of indicators in which they are

deprived.

The MPI constitutes a sincere effort towards expansion

as well as simplification of poverty estimation. While

HDI and MPI use the 3 broad dimensions of health,

56

education and living standards. HDI uses only single

indicators for each dimension of poverty while MPI uses

more than one indicator for each one. This amongst

other reasons has led to the MPI only being calculated

for 104 nations where data is available for all these

diverse indicators while HDI is calculated for almost

all countries. However, though HDI is thus more

universally applicable, its relative sparsity of

indicators also makes it more susceptible to bias.

Indeed some studies have found it to be somewhat biased

towards GDP per capita as demonstrated by a high

correlation between HDI and the log of GDPpc. This has

led to the abandonment of HDI as an accurate yardstick

for measuring poverty and development.

The table below presents the MPI index and other

poverty parameters of developing African nations as at

2009.

Table 4: MPI Index and Other Poverty Parameter for

Some Selected African Nations

Country MPI% ofpeoplewho are

AverageIntensity of MPI

PercentageNumber

PercentageNumber

57

poor Poverty ofPeoplelivingon lessthan $1a day.

ofPeoplelivingon lessthan $2a day

Angola 0.452 77.4 54.3 70.2BurkinaFaso

0.536 71.8 47.3 75.3

Cameroun 0.287 53.3 9.6 30.4Cote’diovre

0.353 61.5 23.8 46.3

Egypt 0.024 6.0 2.0 18.5Gabon 0.161 35.4 4.8 19.6Ghana 0.144 31.2 30.0 53.6Guinea 0.506 82.5 43.3 69.6Kenya 0.229 47.8 19.7 39.3Liberia 0.485 83.9 83.7 94.8Mali 0.558 86.6 51.4 77.1Morocco 0.048 10.6 2.5 14.0Namibia 0.187 39.6 49.1 67.2Niger 0.642 92.4 43.1 75.9Nigeria 0.310 54.1 64.4 83.9Rwanda 0.426 80.2 76.8 89.6SouthAfrica

0.057 13.4 17.4 35.7

Swailizand

0.184 41.4 62.9 81.0

Tunisia 0.010 2.8 2.6 12.8Togo 0.284 54.2 38.7 69.3Uganda 0.367 72.3 37.7 64.5

58

Source; Oxford Poverty and Human Development initiative

(2011)

2.3 HUMAN CAPITAL DEVELOPMENT

Human capital development is the training,

strengthening, fortifying and energizing the human

capital base of a country. Human resource and human

capital have been often being used interchangeably.

Human resource refers to the mere population (youth-

adult size capacity) of a country while human capital

refers to the developmental and tactical training of

the human resource. The human resource of any country

can be either a blessing or curse depending on how they

are being utilized.

Human capital development also connotes the process in

which the human resource of a nation is trained,

exploited, harnessed and utilized. In other words, it

is the management of the human resource of a nation.

Many researches conducted revealed that one of the big

difference between advanced economies and less

developed economies is how well they have invested in

59

human capital development. Advanced countries of the

world have assiduously spent the resources of time,

energy and finance on human capital development and it

paid off for them in terms of higher productivity and

growth.

Human capital development is dissected into two

components which are namely education and health.

Massive investment into these two sectors is a license

for economic boom, progress and prosperity.

2.3.1 EDUCATION

Education is the process of imparting knowledge,

skills, attitude and norms to people. Education is the

greatest legacy that can ever be given to anyone.

Education is the answer to the poverty and misery of

man. Education is the key to exposure. The benefits of

education to mankind can never be overemphasized. All

nations of the world must give extra attention to the

educational sector because the recipients are the

leaders of tomorrow and if they are not properly

educated or imparted upon, they can become catastrophic

to the nation.

60

Due to its importance, the United Nations Organization

for Education, Science and Culture recommended that at

least 26 percent of any nation’s budget must be

allocated to the education sector. It’s worrisome that

Nigeria has failed to meet the required standard over

years. Expenditure on education has not been sufficient

to transform the sector into greater height.

Nonetheless, the education sector in Nigeria has been

bedeviled with various setbacks among are inadequate

funding, unstandardized teaching and learning

curriculum, inadequate infrastructural facilities,

untimely payment of workers’ salaries and remuneration,

incessant strike actions by teaching unions,

recruitment of incompetent teachers etc.

Table 5: Budgetary Allocation on Education and

Expenditure on Education (1981-2012)

Year BudgetaryAllocation onEducation (%)

Expenditure onEducation in(Million)

1981 7.5 165.431982 8.6 187.931983 10 967.4

61

1984 9.2 861.21985 6.5 850.21986 4.4 1094.81987 7.9 653.51988 6 1084.11989 4.5 1941.81990 3.8 2294.31991 5.7 1554.21992 7.8 2060.41993 7.2 7999.11994 6 10283.81995 5.1 12728.71996 6.2 15351.81997 6.5 15944.01998 7.3 26721.31999 8.2 31563.82000 8.3 67568.12001 7.1 59744.62002 6.9 109455.22003 7.8 79436.12004 5.2 93767.92005 8.2 120035.52006 10.4 165213.72007 9.8 186771.62008 10 210444.82009 8.8 223451.52010 7.4 235040.92011 8.3 287544.02012 9.9 321547.0

62

Figure 2: Budgetary Allocation to Education in Nigeria

(%) 1981-2012

63

Figure 3: Total Expenditure on Education in Nigeria in

Million Naira, 1981-2012

2.3.2

HEALTH

To the layman, health is the absence of illness or

infirmities, but the concept of ‘health’ goes beyond

64

this. The most comprehensive and encompassing of health

was given by the World Health Organization (1977), they

defined health as the complete well-being state of a

man physically, emotionally, physiologically,

psychologically and spiritually.

All nations are ensued to give their health sector full

attention, because an healthy worker is a productive

worker, and a productive worker adds value to economic

growth of his country.

The yardsticks used for determining the Development of

Health Sector of a Country are

Life Expectancy: This is the minimum number of years

an individual is expected to live assuming the death

rate is assumed to be zero. In other words, it is the

predicted life-span of an individual when subjecting

the mortality rate to zero. Life expectancy varies

across different countries depending on their health

and environmental conditions. Life expectancy in the

advanced world is higher compared to the undeveloped

countries.

65

Mortality rate: This is the ratio of total deaths to

total population in a specified community or area at a

specified period of time. It is often expressed as the

number of deaths per 1000 of the population per time.

Maternal Mortality rate: This is annual number of

female deaths per 100,000 live birth from any cause

related to or aggravated by pregnancy or its management

excluding accidental or incidental causes.

Total Expenditure of Health: This is the total amount

of money allocated to the health sector for the

citizens’ health improvement and provision of drugs and

health facilities.

Table 5: Life Expectancy and Total Health Expenditure

in Nigeria (1981-2012)

Year

Life Expectancy in Years

Total Expenditureon Health (Nm)

1981 46 84.461982 46 95.951983 46 279.6

66

1984 46 190.21985 46 223.41986 46 360.41987 46 236.41988 46 443.21989 46 452.61990 46 658.11991 46 7571992 46 1025.41993 46 2684.51994 46 3027.81995 46 5060.91996 46 58031997 46 11984.31998 46 161801999 46 18181.82000 47 44651.52001 47 63171.22002 47 39685.52003 48 59787.42004 48 71676.42005 49 98786.72006 49 1055902007 50 1224002008 50 138179.72009 51 1418792010 51 156896.82011 52 200278.9

2012 52225760.8

2013 54 229850.3

67

Source: CBN Statistical Bulletin.

Figure 4: Trend of Total Expenditure on Health in

Nigeria (1981-2013)

2.4 EMPIRICAL REVIEW

68

Osinubi (2006) asserted find it worthwhile to explain

the synergy among poverty, unemployment and growth in

Nigeria. He stressed that Nigeria is a nation blessed

with multifarious and multitudinous natural and human

resources. But due to gross mismanagement, adverse

government policies, none and underutilization of

resources and non-channeling to resources for maximum

benefits. As a result of these, Nigeria has been

bedeviled with poverty and unemployment crisis.

Simbowale (2003) conducted a study between the linkage

of macroeconomic policies and pro-poor economic growth

in Nigeria for the period 1960-2000. The study

unveiled among others that growth was weakly pro-poor.

Again, those who are below the poverty line have not

enjoyed the dividends of growth and the probability of

it getting to them is decreasing at an increasing rate.

Overall, economic growth in Nigeria is not pro-poor.

Bello and Abdul (2010) examined the poverty situation

in Nigeria by employing the data on economic growth and

millennium development goals (MDGs) expenditure. The

methodology adopted was panel data analysis, fixed and

random effects and the weighted least squares. The

69

results revealed that a unit increase in per capita

income produced a unit increase of 0.6 in poverty

level. Similarly, a unit increase in MDG expenditure

resulted in 11.56 unit rise in relative poverty. The

study concluded that economic growth and MDGs

expenditure within the sample period. Ibrahim and Umar

(2008) assessed the determinants of poverty as well as

poverty coping strategies among family households in

Nassarawa State, Nigeria. The study employed sampling

to select 150 farming households and the used of cost

of calorie method and discrimination analysis to

explore the incidence and determinants of poverty. The

incidence of poverty was found to be high and its

determinants are size of household, size of income,

number of household employed outside agricultural and

the number of adult literate. The major poverty coping

strategies include skipping of meals, reduction in the

quantity of meals served and engaged in wage labour.

The study recommended that the farming households

should family households should be effectively involved

in the formulation of strategies for imparting

knowledge on family planning to the household.

70

Bakare (2010) examined the determinants of urban

unemployment in Nigeria. The determinants used were

unemployment rate, demand for labour, and supply of

labour, inflation, unemployment, capital formation,

capacity utilization and nominal wage rate. The results

indicated that rising nominal wage rate and rapid

population growth has multiplied the supply of labour

relative to the absorptive capacity of the economy and

this is the chief determinant of unemployment in

Nigeria. Muhammad (2011) assessed the relationship

between economic growth and unemployment in Nigeria

using the OLS technique for the period 2000-2008. His

result showed that unemployment is inversely related to

GDP. A rise in unemployment rate results in 65 percent

fall in GDP. Durosimi (2012) did an empirical

investigation of the impact of unemployment on economic

growth between 1970-2010. The variables employed in the

model were government expenditure, broad money supply,

unemployment rate and GDP growth rate-being the

explained variable. The results indicated that

government expenditure and money supply favors growth

while unemployment rate was found to be significant to

the reduction of growth within the period reviewed. The71

study recommends amongst others that the educational

system should be restructured so as to enable the youth

to be self reliant and self employed

Downes (2008) investigated the necessary conditions for

reducing unemployment rate in Trinidad and Tobago for

the period 1971-1996. Using the ECM estimated by the

OLS instrumental variables. He discovered that long and

short runs changes in RGDP and Real Average Earnings

have a statistically impact on changes in unemployment

rate. While increase in GDP reduces the unemployment

rate in short and long terms but lower in the short run

and increase in real average earnings raises the

unemployment rate in the long run.

Onyedikachi and Nwabueze (2013) conducted a study on

the linkage between poverty a economic growth in

Nigeria between 1990 and 2010 using the OLS regression

technique. The dependent variable is the economic

growth indexed by the GDP. The independent variables

captured the three dimensions of the human development

index (life expectancy (health), adult literacy rate

(education) and per capita income (decent standard of

living) and the discomfort index (unemployment rate).

72

The results indicated that life expectancy and per

capita income were positively related to GDP with their

co-efficient being 0.09 and 0.45. on the other hand,

adult literacy rate and unemployment rate were

adversely related to GDP with the co-efficient of -

0.003 and -0.01. They attributed the negativity of

adult literacy rate to the failure of the government to

allocate at least 26 percent of the budget to the

education sector. It was also found higher life

expectancy should translates to increased economic

growth, massive investment in education will lead to

economic growth, high per capita income will lead to

growth. They advised that government should embark to

human development programme as the only panacea to

poverty. The study recommends amongst others that the

educational system should be restructured so as to

enable the youth to be self reliant and self employed.

Chigbu (2012) explored the effect of poverty and

unemployment on growth in Nigeria between 1991-2010.

The variables adopted were health expenditure, health

expenditure, agricultural expenditure, population and

unemployment rate. The results revealed that health

expenditure, population and unemployment rate have73

influenced on growth positively while education

expenditure and agricultural expenditure. The study

noted that the causes of poverty and unemployment in

Nigeria are low economic growth, increasing population,

bad governance, macroeconomic instability, corruption,

debt burden, poor environment, neglect of the

agricultural sector, poor health facilities and

inadequate education infrastructures.

74

CHAPTER THREE

RESEARCH METHODOLOGY AND EMPIRICAL ANALYSIS

3.1 IDENTIFICATION OF

VARIABLES

The variables that are employed in the study are annual

time series secondary data on poverty level (PL), GDP

growth rate (GDGR), unemployment rate, (UMR),

population (POP), inflation rate (INF), total education

expenditure (TEED), total health expenditure (TEEH),

external debt (EXD), corruption perception index (CPI).

The years reviewed covers the period of 1985-2013.

3.2 MODEL SPECIFICATION

Referring to Abubakar (2002), Ajakaiye and Adeyeye

(2001) and NBS (1996), the main causes of poverty in

Nigeria are low economic growth, unemployment, high

inflation rate, high population, inadequate funding and

delivery of the education and health sector, foreign

debt burden, corruption and bad governance.

In the same vein, the study seeks to examine the

determinants of poverty in Nigeria. The dependent

75

variable adopted is the poverty level (PL) and the

independent variables are Growth rate of GDP (GDGR),

unemployment rate (UMR), population (POP), inflation

rate (INF), total education expenditure (TEED), total

health expenditure (TEEH), external debt (EXD) and

corruption perception index (CPI). Stating the above

expression using a function relationship we have

PL= f (GDGR, UMR, POP, INF, TEED, TEEH, EXD, CPI)………………

(1)

Converting the above functional relationship in

equation 1 into an econometric model, it becomes

PL= b0+ b1GDGR+ b2UMR + b3POP + b4INF + b5TEED +b6TEEH +

b7EXD + b8CPI + u------ (2), where b0-b8 are the co-

efficient of parameter estimate and u is the

disturbance term.

3.3 DISCCUSION OF VARIABLES

A. POVERTY LEVEL:

This is the unit of the proportion of the poor people

(those below $1) in the total population. It measures

the number of the people who are inaccessible to the

76

basic needs of life such as food, cloth, shelter and

education and health facilities it is the explained

variable.

B. GROSS DOMESTIC PRODUCT GROWTH RATE

The gross domestic product is the total market value of

commodities produced within the geographical boundary

of a nation at a specified period of time. It is

equally seen as the market size of an economy. The GDP

can either rise or fall in relation to the base year.

GDP growth is the percentage change in the GDP over

year. High growth rate is perceived to minimize the

incidence of poverty. Therefore, a negative

relationship exists between poverty and growth rate.

(b1<0)

C. UNEMPLOYMENT RATE

This is the percentage of those who are actively

seeking for job but unable to get one out of the total

labour force (economically active population). The

higher the unemployment rate, the higher the intensity

of unemployment. An average unemployed man is a poor

man because he currently did not have a means of

77

livelihood to meet basic needs of life. Therefore a

positive relationship exists between unemployment and

poverty (b2>0)

D. POPULATION

This is the total number of people living in a

geographical setting at a particular point in time.

Increase in population makes an average income to

decline because it will spread on all heads. Also,

rapid rise of population growth ahead of GDP growth is

a sign of underdevelopment and hence poverty. High

population translates to increased poverty. (b3>0)

E. INFLATION RATE

Inflation is the persistent and sustained rise in the

general price level of goods and services within an

economy over a specified period of time. Inflation also

arises when the quantity of money exceeds the rise in

output, or when the aggregate demand exceeds aggregate

supply at full employment equilibrium or when the

nominal wage rate exceeds labour productivity.

Inflation weakens the monetary mechanism of an economy

and leads to the escalating increase in the price of

78

basic commodities which will be unaffordable by an

average individual. High inflation produces economic

hardship for the citizens (b4>0)

F. EDUCATION EXPENDITURE

Education expenditure is the total amount expended to

the educational sector for its improvement, service

delivery and rehabilitation. It is unfortunate that the

expenditure on education has not been sufficient to

reduce poverty to the barest minimum in Nigeria.

Moreover, the Nigerian education is sub-standard

because it is usually under-funded by the government

and the allocation that goes into the sector is less

than the required 26 percent of the proposed budget as

laid down by UNESCO. Education being a component of

human development is a veritable of reducing poverty

through skill acquisition. Thus, a negative

relationship exists between education expenditure and

poverty (b5<0)

G. HEALTH EXPENDITURE

Health expenditure is the total amount expended to the

health sector for its improvement, service delivery and

79

rehabilitation. It is unfortunate that the health

sector has not remarkable over years. The budgetary

allocation to the health sector is always less than 8

percent since 1980. A proof for the under-performance

of the sector is low life expectancy, high maternal and

infant mortality rate, inadequate access to health

facilities and strike action by health workers among

others. Expenditure on health ought to suppress the

incidence of poverty in Nigeria (b6<0)

H. EXTERNAL DEBT

External debt is the amount a country owed foreign

agencies and countries. It is debt incurred from

outside the geographical limits of a country. External

debt raises poverty simply because the funds obtained

will be repaid out of the insufficient resources of the

country ( b7>0)

I. CORRUPTION PERCEPTION INDEX

Corruption is the misuse of public power for personal

illegitimate gains which need not to be monetary.

Corruption involves all form of embezzlement,

misallocation of resources, and misappropriation of

80

funds, thuggery, godfatherism, extortion, electoral

malpractices, nepotism, money laundering and the like.

Corruption is present in every economies but in varying

degree. Corruption is found to be prevalent among the

less developed economies. Corruption propagates poverty

because the money and resources meant for the welfare

of the nation is siphoned but few people who are in

authority and rendering them into destitution (b8>0).

3.5 NATURE AND SOURCES OF

DATA

The data employed in the study are secondary data

obtained from the Central Bank of Nigeria Statistical

Bulletin, National Bureau of Statistics report and the

United Nations Development Programme report.

3.6 ESTIMATION TECHNIQUE

The study adopts the Ordinary Least Square technique

using multiple regression analysis. The technique will

be adopted because it is the best unbiased estimator in

terms of efficiency, minimum variance, consistency,

accuracy and depicting the significance status of the

81

parameter estimates. The Statistical Package for Social

Science (V.20) will be employed to run the regression

among the variables.

CHAPTER FOUR

PRESENTATION OF DATA AND INTERPRETATION OF

RESULTS

4.1 RESEARCH DATA82

The data used for the regression analysis in the study

are presented below

Year PL GDGR UMP POP INF TEED TEEH EXD

CP

I

1985

0.463

8.323 6.1 78.435 7.4

850.2 223.4

17300.6

0.

2

1986

0.46

-8.754 5.3 80.688 5.7

1094.8 360.4

41452.4

0.

2

1987

0.454

-10.752 7 83.043 11.3

653.5 236.4

100789.1

0.

2

1988

0.45

7.543 5.3 85.488 54.5

1084.1 443.2

133956.3

0.

2

1989

0.445

6.467 4.5 87.998 50.5

1941.8 452.6

240393.7

0.

2

1990

0.349

12.766 3.5 90.557 7.4

2294.3 658.1

298614.4

0.

2

1991

0.35

-0.618 3.1 93.161 13

1554.2 757

328453.8

0.

2

1992

0.31

0.434 3.4 95.725 44.6

2060.4 1025.4

544264.1

0.

2

1993

0.327

2.09 2.7 98.36 57.2

7999.1 2684.5

633144.4

0.

1

1994

0.335

0.91 2 101.068 57

10283.8 3027.8

648813

0.

1

1995

0.351

-0.307 1.8 103.85 72.8

12728.7 5060.9

716865.6

0.

3

1996

0.357

4.994 3.4 106.709 29.3

15351.8 5803

617320

0.

5

1997

0.36

2.802 3.2 109.647 8.5

15944 11984.3

595931.9

0.

1

1998

0.362

2.716 3.2 112.665 10

26721.3 16180

633017.9

1.

9

1999 0.368 0.474 3.1 115.766 6.6 31563.8 18181.8 2577374.4 1.

83

6

2000

0.361

5.318 4.7 118.953 6.9

67568.1 44651.5

3097383.9

1.

2

2001 0.323 8.164 4.2 122.228 18.9 59744.6 63171.2 3176291 1

2002

0.326

21.177 3 125.593 12.9

109455.2 39685.5

3932884.8

1.

6

2003

0.329

10.335 14.8 129.05 14

79436.1 59787.4

4478329.3

1.

4

2004

0.33

10.585 13.4 132.602 15

93767.9 71676.4

4890269.6

1.

6

2005

0.402

5.393 11.9 136.253 17.9

120035.5 98786.7

2695072.2

1.

9

2006

0.412

6.211 14.6 140.004 8.2

165213.7 105590

451461.7

1.

9

2007

0.417

6.972 12.7 143.854 5.4

186771.6 122400

431079.85

2.

7

2008

0.42

5.984 14.9 147.81 11.6

210444.8 138179.7

493180.22

2.

7

2009

0.462

6.96 19.7 151.874 11.5

223451.5 141879

590441.08

2.

7

2010

0.612

7.976 21.4 156.051 13.7

235040.9 156896.8

689845.3

2.

7

2011

0.637

7.356 23.9 160.342 10.8

287544 200278.9

567100

2.

7

2012

0.715

6.332 25.7 164.752 12.2

321547 225760.8

653010

2.

4

2013

0.736

7.161 23.9 169.282 8.5

335459 229850.3

988997.72

2.

5

4.2 PRESENTATION OF REGRESSION RESULTS

Model SummaryModel R R Square Adjusted R

SquareStd. Error ofthe Estimate

84

1 .847a .717 .604 .221a. Predictors: (Constant), CPI, EXD, INF, GDGR, UMP, POP,TEED, TEEH

ANOVAa

Model Sum ofSquares

df Mean Square F Sig.

1

Regression 2.472 8 .309 6.334 .000b

Residual .976 20 .049

Total 3.448 28a. Dependent Variable: PLb. Predictors: (Constant), CPI, EXD, INF, GDGR, UMP, POP, TEED, TEEH

Coefficientsa

Model UnstandardizedCoefficients

StandardizedCoefficients

t Sig.

B Std. Error Beta

1

(Constant) .341 .710 .481 .636GDGR -.001 .009 -.020 -.130 .898UMP .001 .018 .031 .075 .941POP -.004 .008 -.328 -.548 .590INF .001 .003 .041 .284 .779TEED 2.059E-006 .000 .632 .552 .587TEEH 3.639E-006 .000 .767 .650 .523EXD -3.707E-009 .000 -.015 -.082 .935CPI -.113 .084 -.385 -1.347 .193

a. Dependent Variable: PL

4.3 INTERPRETATION OF RESULTS

85

Correcting all the co-efficient of the parameter

estimates to 2 decimal place, the regression equation

becomes

PL= 0.34 – 0.02GDGR + 0.03UMP -0.33POP + 0.04INF +

0.63TEED + 0.78TEEH -0.02EXD – 0.39CPI + u

The intercept of the equation is 0.34. This connotes

that poverty incident is 0.34 units while subjecting

all the independent variables to zero.

Gross domestic product growth rate is found to be

negatively related to poverty. This means that economic

growth reduces poverty in Nigeria to an infinitesimal

degree. A one percent rise in economic growth produces

a 2 unit fall in poverty level while keeping other

variables constant.

Unemployment and poverty are twined. Unemployment and

poverty are positively correlated in the Nigerian

economy. A one percent rise in unemployment rate

generates a 3 unit rise in poverty level holding other

variables fixed.

For population, it contradicts the a-priori

expectation. Normally, higher population leads to

86

higher poverty incidence, but reverse is the case in

the Nigerian setting where population is found to

reduce poverty. A one percent rise in population leads

to a 33 unit fall in poverty level holding other

variables constant. This can largely be attributed to

rise in the per capita income over years.

Inflation remained a causal factor of poverty in

Nigeria. A percent rise in inflation rate results in a

4 unit rise in poverty level. Rise in the price of

basic goods of life makes it difficult to be purchased

a common man or household.

Total expenditure on education and health negated the

a-priori expectation. Education and health are supposed

to be agents of poverty reduction. A percent rise in

education expenditure and health expenditure produces a

63 and 78 unit rise in poverty level respectively

keeping other variables fixed. This clearly showed that

the government has not put maximum attention to human

capital development which is very crucial for poverty

reduction and wealth creation.

87

External debt and corruption affects poverty

negatively. A percent rise in external debt and a unit

rise in the corruption transparency index generate a 2

unit fall and 39 unit fall in poverty level while

keeping other variables unchanged.

All the explanatory variables are statistically

insignificant as their probability values are higher

than the standard 0.05.

The co-efficient of determination is 0.847. This

indicates that 84.7 percent of the total variation in

poverty level is explained by changes in the

independent variables stated in the model. The 15.3

percent unexplained variation is caused by other

factors affecting poverty which are included in the

model.

The probability of f-statistics is 0.00 which is less

than the standard 0.05. This connotes that the overall

influence of all the explanatory variables on poverty

level is statistically significant.

4.4 RESEARCH FINDINGS AND IMPLICATION

88

From the regression results above, it can be deduced

that unemployment and inflation rate propagates poverty

in Nigeria. An unemployed man is an average poor man

because he has no source of income to afford the basic

life-requirement commodity. The fight against poverty

can be won by creating employment opportunities for the

youths and other destitute.

Inflation is the persistent and appreciable increase in

the general price of all goods and services sustained

in an economy over a specific point in time. For

inflation to exist, the price increment must affect all

commodities in the economy, the price increment must

affect all the sectors of the economy and the price

increment must be have been persistent in such an

economy. One of the main effects of inflation is that

it makes basic goods and services to be unaffordable by

a common man as a result of the increase in its price.

Little wonder it was found from the results that high

inflation stimulates the intensity of poverty

incidence.

Abubakar (2002) alluded that low economic growth causes

poverty in Nigeria. Though, from the results gotten,

89

GDP growth rate was found to have influenced poverty

reduction negatively within the reviewed years, but

high or low growth rate of GDP has not reflected in the

material wellbeing of the people. As at today, Nigeria

is ranked as the largest economy in Africa and yet

still ranked as one of the poorest nation in the world.

This confirms is that the country’s huge wealth and

resources are being spent and used by the few elites,

thus rendering the masses into penury. Economic growth,

per capita income or GDP should and must be abandoned

as criteria of development because it neglects

paramount developmental issues in its computation.

Normally, increase in population should generate high

poverty incidence. Countries with high population are

perceived to be poor. In the Nigeria setting,

population has not contributed to poverty during the

estimated year. This can be linked to adoption of

family planning practices, reduction in the number of

children be given birth to in a household and the like.

Health and education expenditure being components of

human capital development is expected to reduce

poverty. One of the factors that distinguish developed

90

nations from the developing one is the amount of

investment devoted to human capital development. The

results obtained indicate that increase in health and

education expenditure raises poverty level. This is

attributed to the inadequate funding to the sector,

mismanagement of resources allocated to the sector,

embezzlement of funds meant for rehabilitation and

infrastructures by top officials in the sector. Another

reason is low budgetary allocation to both sectors.

Since 1980, the education sector and health sector have

not received above 10 percent allocation of the

national budget.

External debt is the fund, money, grants a country lend

from other foreign countries and agencies. The impact

of external debt could either be positive or negative

depending on the managerial expertise and ability of

the receiving country. A properly managed debt incurred

can boost economic growth and reduce poverty if the

funds are channeled in the right way and are dispensed

judiciously on productive things. On the other hand,

external debt can retard growth and raise poverty if

the funds acquired are expended on less-prioritized

91

projects. It can be said to a certain degree, that

external debt reduced poverty incidence insignificantly

in Nigeria within the years estimated.

Corruption impedes retards and paralyzes economic

growth and development of any country. Based on

economic theory, corruption propels poverty. This

connotes that the money that needs to be enjoined by

the ‘many’ goes to the hand of the ‘few elite’. On the

other hand, corruption contributes to economic growth

only if the funds siphoned are spent productively on

reasonable projects.

CHAPTER FIVE

5.1 SUMMARY OF RESEARCH STUDY

The principal goal of every nation is to achieve a

sustainable level of economic development but there are

myriads of factor that could hinder its attainment such

as poverty, unemployment, population explosion, income

92

inequality, corruption etc. Poverty and unemployment

are interrelated. Both menaces are impediments to

economic growth in Nigeria.

Almost 70 percent of Nigerians are below the poverty

line while 92 percent of the same people earn less than

$2 dollar daily. The major causes of poverty in Nigeria

are unemployment, environmental degradation, population

explosion, corruption, debt burden, ignorance,

illiteracy and inadequate health. Several

administrations have formulated various policies and

programmers like DFRRI, NAPEP, NDE, NEEDS, FEAP and the

like. But as formidable as these initiatives were, they

are have failed to eradicate poverty to the barest

minimum. Their failure can largely be attributed to

inadequate co-ordination and planning, bureaucracy,

greed on the part of those that initiated them, poor

delivery to the target group. Based on the report of

the NBS, poverty is prevalent in the North West

geopolitical zone and particularly in the rural regions

of the country.

The national bureau of statistics revealed that 65

percent of the youths are unemployed thereby has led to

93

the under-utilization of human resource in Nigeria. The

major cause of unemployment in the Nigerian economy has

been attributed to the unabsorptive capacity of the

unemployed into the labour market. Unemployment has

been recognized as the hallmark of poverty. The

implication of unemployment is, but not limited to loss

of national output.

Though Nigeria is regarded as having the largest

economy in Africa, but in aspect of economic and human

development, the country’s position has not been

remarkable. The indices of human development and

multidimensional poverty rankings have showed that

Nigeria is still undeveloped in comparison to other

African countries such as Egypt, Libya, Equatorial

Guinea and South Africa.

The study reviewed the synergy among poverty,

unemployment, human development and growth between

1985-2013. The Ordinary Least Square Regression \

Technique via the Statistical Package for Social

Science was adopted. The poverty level was used as the

explained variable while the explanatory variables are

GDP growth rate, unemployment rate, population,

94

inflation rate, total education expenditure, total

health expenditure, external debt burden and corruption

transparency index. The regression results showed that

unemployment and inflation are the main causes of

poverty in Nigeria.

5.2 CONCLUSION

The Nigerian economy is paradoxical in nature: wealthy

nation but poor inhabitants. Despite the country’s

large size of GDP, the growth recorded is not pro-

people and has not reflected meaningfully into the

material well-being of the citizens.

For Nigeria to attain the sustainable level of economic

development, the government must formulate an all-

encompassing policy that will cover poverty

alleviation, job creation and revitalization of

education and health sectors.

5.3 POLICY RECOMMENDATION

95

Based on the research findings, the following policy

are forwarded and recommended for consideration as

regard the betterment of the Nigerian economy.

a.There should be a participatory approach in

programme planning, implementation and evaluation

of poverty and unemployment programmes. Stable

macroeconomic policies such as rising inclusive

growth, stable exchange rate, single-digit

inflation rate and low interest rate and

consistency in government policies is needed to

achieve the minimization of poverty and

unemployment.

b.An enabling environment should be created for

private investment to strive as this will go a long

way to reducing unemployment via usage of local

skilled manpower. The problem of incessant

insecurity should be addressed seriously as this

poses a threat to foreign and local investment.

c.There should be a population policy that will limit

population growth to a level that will match the

employment generation capacity of the economy.

96

d.Skill acquisition should be made a priority and be

included in the curricula of tertiary institutions

so that graduates will be provider of employment

rather than a seeker. Government should provide

soft loans, grants, aids and credit facilities so

that people who have completed their acquisition

training can establish theirs in a small/medium

way.

e.The fight against corruption should be intensified

so that resources and funds misallocated and

mismanaged would be ventured into poverty and

unemployment reduction programmers.

f.The agricultural sector should be revitalized,

restructured and made attractive enough for youths

to engage in it.

g.Basic infrastructures should be put in place in the

rural areas so as to avoid the situation of rural-

urban migration and urban congestion.

h.Government should prioritize human capital

development as this is the panacea to the

developmental challenges faced in Nigeria.

Budgetary allocation to the education and health

sectors should be more than twenty percent as97

proposed by the United Nations. Provision of

adequate and necessary facilities needed in both

sectors should be implemented.

98